The fight for what's fair: Equality Act 2010

With new rules on the gender pay gap currently making the headlines, ensuring equality for employees and customers is a growing priority for many organisations.

The origins of the Act

It could be argued that the Equality Act 2010 has its roots in a 17th century piece of legislation – the Habeas Corpus Act 1679, which is still in force today. Literally meaning ‘you may have the body’, ‘Habeas Corpus’ evolved to ensure that no person could be imprisoned unlawfully. Various other Acts were passed through the centuries, including the Equal Pay Act (1970), the Sex Discrimination Act (1975) and the Disability Discrimination Act (1995); in October 2010 the Equality Act harmonised over 116 separate pieces of legislation into one single Act of Parliament.

Who and what does it cover?

Applying to all employers and service providers in businesses of any size, the Equality Act exists to protect people from discrimination. It applies to all individuals including employees, job applicants, contract workers and the self-employed, amongst others. Discrimination is the act of treating someone less favourably because of a protected characteristic. Such characteristics include:

age

disability

gender reassignment

marriage and civil partnership

pregnancy and maternity

race

religion or belief

sex

sexual orientation

Discrimination can manifest in different ways. Direct discrimination is more overt mistreatment, due to a protected characteristic; indirect discrimination occurs when someone is disadvantaged by a rule or requirement, which initially appears to be neutral and non-discriminatory, but inadvertently is. An example of this may be where services or purchasing options are only made available online, which could disadvantage a blind person. It’s important to note that the Equality Act applies even when a service is free.

What does this mean for insurance companies?

Insurance companies rely on huge amounts of data and information to inform their risk selection and pricing. How then, can this need to assess risk be balanced with avoiding both direct and indirect discrimination? Is there ever a time when it’s both legal and appropriate to use personal characteristics to inform an insurance product’s availability and price?

In short, the answer is yes. The law accepts that some exceptions may apply regarding disability, sex, gender reassignment and pregnancy and maternity. For example, an insurance provider is allowed to consider a disability as an influencing factor where the insurance risk may be greater as a direct result. This could influence the terms on which the policy is presented, or even result in a policy not being offered. However, an insurer is forbidden from instigating a blanket policy where the terms are uniformly decided for disabled people, or refused altogether – this would directly contravene the Equality Act. Additionally, wherever an insurance provider chooses to refuse cover based on an exception, it must be able to demonstrate there is a difference in risk associated with the protected characteristic in relation to the product.

Since 2012, it’s been illegal for insurance companies to discriminate on the basis of gender. Prior to this date, the general trend was for female drivers to be offered lower car insurance premiums but the Court of Justice of the European Union (CJEU) ruled that this would no longer be allowed, since it was a breach of discrimination law. Despite this ruling, statistics have shown that men still pay more on average for their car insurance than women, with a 2017 report from Confused.com citing a gap of £114 in the women’s favour1. It has been proposed that men’s higher premiums may arise due to a preference for certain vehicle types and/or occupations.

Age has historically been another deciding factor for insurance companies. This is still permissible in certain circumstances, but again an insurer must base their decision on risk assessments from a reliable source and ensure this risk relates to the product or service being offered. A customer may challenge where they believe that this is not the case.

Consequences of contravening the Equality Act

Where an employee or ex-employee believes they have been unlawfully discriminated against they can take their case to an employment tribunal. In a successful outcome for the employee, they may be awarded compensation for both financial loss (such as loss of earnings) and ‘injury to feelings’. The latter relates to the upset, harm and distress caused as a result of the discrimination. Whilst there is no limit to the amount which may be awarded for financial loss, there are guidelines related to injury to feelings – known as the ‘Vento bands’. This can start from £500 for less serious cases and rise to £30,000 for cases in the most serious category.

In some cases, a plaintiff may bring a combined claim under dual discrimination provisions, where they believe they have been treated less favourably due to a combination of two protected characteristics.

The Equality and Human Rights Commission is the public national equality body for England and Wales, whose purpose is to ensure the enforcement of equality law and to challenge discrimination and harassment. It also has the power to apply for judicial review and intervene in court proceedings.

Before 2010

What about those people who were subjected to discrimination prior to the Act’s inception in 2010? In this case, the Equality Act does not apply but rather the legislation which was in force at the time does. In the rare event of an insurance contract made before 21 December 2012, this can lawfully discriminate based on gender or pregnancy, through applying different premiums or benefits to the policy. However, once such contracts are due for renewal, they must be updated to comply with current legislation.

Insurance cover

Any business owner may wish to consider the repercussions of a discrimination claim or legal action being brought against them. Different types of insurance can offer reassurance should such a situation arise. One such example is professional indemnity insurance which covers the legal liability to compensate third parties which suffer loss as a result of professional negligence. Another consideration is directors and officers insurance. This type of policy provides cover to directors in a number of situations including discrimination, harassment and claims of unfair dismissal.

Of course, the best way to safeguard against such an event is to comply with the guidelines of the Act and for organisations to ensure that they take every step to treat customers and employees fairly, equally and respectfully. The world is changing rapidly: an increasing focus from companies on employee well-being, plus initiatives on quality and diversity, will make understanding and complying with the Equality Act ever more important.

This promotional material is intended for insurance broker use only and no-one else
should rely upon it.
It must not be made available to anyone other than the intended recipient, either in its original form or any reproduction.